The state Office of Insurance Regulation's "market conduct examination" — which reviewed Citizens' operations for the last two years — offers fresh evidence of institutional problems at the mammoth state-run insurer.

According to the report, Citizens has mostly followed its policies, but in some cases those policies were too lax, leading to expensive repercussions.

The report found that Citizens "does not appear to place any emphasis on price negotiation, instead relying on best and final offer" from its private contractors, who collect one-fifth of the $2 billion in annual premiums paid by policyholders.

Citizens is pushing back against the findings, arguing that it follows state law and has rigorous policies to get the best services at a competitive price.

"In situations not covered by (state law), Citizens conducts competitive solicitations using the same style of processes as state agencies (i.e., Invitations to Bid, Requests for Procurement and Invitations to Negotiate)," said spokeswoman Christine Ashburn in an email. Ashburn said Citizens president Barry Gilway has asked the state insurance commissioner to amend the report.

OIR also criticized Citizens for expensive travel and meals that surpassed federal and state guidelines for acceptable expenses. That finding comes on the heels of a Herald/Times investigation and a chief inspector general report highlighting lavish spending by executives, including $600-a-night hotel stays in Bermuda.

At the same time, Citizens has been squeezing homeowners by slashing coverage and raising rates, claiming that it does not have enough money to pay for a major hurricane strike.

"I really don't get why they don't have enough money," said Gina Guilford of Miami, whose homeowner's insurance premium doubled last year. "Their rates have been rising steadily and there has been no major hurricane in years. Mismanagement is my guess. Why should any of us have to pay for a government-run insurance agency's inability to manage funds and their employees?"

After media reports and the state's chief inspector general documented Citizens' corporate expenses, the company announced new policies to crack down on spending abuses.

Still, the OIR report fuels criticism of Citizens and could hamper the efforts of some lawmakers who are determined to pass major insurance reforms this year to help the state-run insurer raise its rates faster.

"This report further highlights the operational deficiencies, blatant disregard for state policies and lack of oversight and fiduciary responsibilities by Citizens Property Insurance," said Rep. Frank Artiles, R-Miami.

Artiles has been critical of Citizens' aggressive push to shrink its rolls and has been part of a coalition of South Florida Republicans and statewide Democrats voting against cost-hiking insurance legislation.

As Citizens seeks to shed many of its 1.3 million policies, it has been bogged down by a series of corporate scandals. Last year, Gov. Rick Scott twice called on his inspector general to investigate Citizens after the Times/Herald reported on lavish travel spending and allegations of corporate misconduct. The company's Office of Corporate Integrity was disbanded after it uncovered evidence of waste at the company, including hundreds of thousands of dollars in severance packages paid to executives who resigned amid scandal.

A separate 2012 audit found that Citizens had inadvertently given away $2.5 million to another insurance company. The money has since been recouped.

The OIR report also found that Citizens spends nearly $8 million each year to lease office space for its 1,200 employees, including $10,894 per month for "unoccupied" office in Tallahassee. Ashburn said the company is trying to either sublease the space or negotiate an early buyout to "reduce the overall expense."

The OIR findings weren't all bad: The report found that Citizens did an adequate job of processing claims, monitoring its investment portfolio and managing depopulation (reducing number of policyholders).

Toluse Olorunnipa can be reached at tolorunnipa@MiamiHerald.com or on Twitter at @ToluseO.